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Employment Law Changes from April 2019

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There are quite a few employment law changes from April 2019 that will affect your payroll.

New legislation from 6th April requires all employers to provide a payslip to all workers, and to show hours on payslips where their pay varies by the amount of time worked. Many employers will need to review and potentially change the way they issue payslips to include those who are recognised as ‘workers’ and will also be obliged to include the total number of hours worked.

The minimum contributions for auto-enrolment pension schemes increase for both employees and employers in April 2019. Employers must contribute a minimum of 3% of an eligible worker’s pre-tax salary, with the employee contributing 5% themselves.

The budget changes to rates from 1st April:
The National Living wage for over 25 year olds increases to £8.21 per hour from £7.83.
The National Minimum Wage for 21 to 24 year olds increases to £7.70 per hour from £7.38.
The National Minimum Wage for 18 to 20 year olds increases to £6.15 per hour from £5.90.
The National Minimum Wage for under 18 year olds increases to £4.35 per hour from £4.20.

The lower earnings threshold also increases in April 2019:
The weekly earnings threshold for National Insurance and Statutory payments increases from £116 to £118 per week.
Statutory Sick pay increases from £92.05 to £94.25 per week.
Statutory Maternity/Paternity/Adoption Pay increases from £145.18 to £148.68 per week.

Private sector organisations with 250 or more employees must publish their gender gap figures on 4th April 2019.

A new Postgraduate loan (PGL) deduction starts in April 2019. The threshold is £21,000 and the deduction rate is 6%. The PGL will run concurrently with plan 1 and plan 2 repayments if the employee has these in place.

New from April 2019 is the ability to submit revised full payment submissions (FPS) to HMRC beyond 19th April 2019 for the 2018-19 tax year. Previously you had to process an Earlier Year Update (EYU). From April 2020 the EYU will no longer be a valid submission and HMRC’s Basic tools software will be updated to allow customers to submit a FPS return for the year ending 5th April 2020 and onwards, to report any amendments.

Pension Re-enrolment Duties

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Are your pension re-enrolment duties coming up soon?

More than 1,200,00 employers have now successfully met their automatic enrolment duties and put nearly 10,000,000 staff into a workplace pension. However, automatic enrolment has ongoing tasks that must be completed to ensure employers continue to comply with the law, and staff continue to receive the pensions to which they are entitled.

Every three years, employers must put certain staff back into a pension scheme. This is called ‘re-enrolment’. Your pension re-enrolment duties must be carried out approximately three years after your automatic staging date. Employers must complete re-enrolment which means identifying staff that may need to be re-enrolled into the pension scheme. This may include staff that have previously opted-out of the pension. Even if you have no staff to re-enrol, you will need to complete a re-declaration of compliance to tell The Pensions Regulator that you have met your duties. Many employers are now coming up to the 3 year anniversary now.

Your re-enrolment duties:

* Choose your re-enrolment date from within a six-month window, which starts three months before the third anniversary of your automatic enrolment staging date and ends three months after it.

* Assess your staff. On your chosen re-enrolment date, you will need to assess certain staff to work out if you need to put them back into your pension scheme. Do this on your re-enrolment date.

* Write to staff that you have re-enrolled. Do this within 6 weeks of your re-enrolment date.

* Complete your re-declaration of compliance. Do this within 5 months of the third anniversary of your staging date.

Most employers are aware and understand that ongoing duties, but a small minority who fail to meet ongoing duties will risk financial penalties.

Click here for further guidance.

New Payroll Rates from April 2018

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The 2018-19 tax year means you need to know all the new payroll rates from April 2018.

* The personal allowance increases from £11,500 to £11,850 per year, making the standard tax code 1185L
* The 20 per cent basic rate tax band increases from £33,500 to £34,500 per year
* The lower earnings limit for National Insurance contributions increases from £113 per week to £116 per week or from £490 per month to £503 per month
* The National Minimum Wage increases from £4.05 to £4.20 per hour for 16-17 year olds
from £5.60 to £5.90 per hour for 18-20 year olds
from £7.05 to £7.38 per hour for 21-24 year olds
from £3.50 to £3.70 per hour for apprentices
* The National Living Wage increases from £7.50 to £7.83 per hour for those 25 years old or older
* Statutory Sick Pay increases from £89.35 per week to £92.05 per week
* Statutory Maternity, Adoption and Paternity Pay increases from £140.98 per week to £145.18 per week
* Minimum Automatic Enrolment pension contributions increase from 1% to 2% for employers and from 1% to 3% for employees
* Student loan thresholds increase to £18,330 for Plan 1 loans and to £25,000 for Plan 2 loans

Increases in minimum contributions for automatic enrolment pensions

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Under automatic enrolment, minimum pension contributions are required to increase over time. With effect from 6th April 2018 the total contribution increases from the current minimum of a total contribution of 2% of qualifying earnings, to a total of 5%, and again on 6th April 2019, increasing to a total minimum of 8%.

The employer and the employee can choose to pay more than the minimum contributions if they wish.

Beginning on 6th April 2018, employers may be required to increase the amount of their contributions into their automatic enrolment pension. The total contribution level will be 5%, with the employer paying a minimum of 2% and the employee paying 3%

The contribution levels continue to rise  with effect from 6th April 2019 with the employer paying a minimum of 3% towards the pension and the employee paying 5% to reach the minimum level of 8% contribution.

Date effective Employer minimum contribution Staff contribution Total minimum contribution
Currently until 5 April 2018 1% 1% 2%
6 April 2018 to 5 April 2019 2% 3% 5%
6 April 2019 onwards 3% 5% 8%

More information can be found on The Pensions Regulator website.

New Employers and automatic enrolment

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Taking on staff is an essential part of growing a business and there are several things to consider, including automatic enrolment. Aside from checking whether you need to register as an employer with HMRC; checking if your employee has the legal right to work in the UK and taking out employer’s liability insurance, you will also need to understand your automatic enrolment dates and duties.

The date that your duties start will depend on when you employ your first worker, as this date determines whether you will have a staging date, or whether your duties will begin immediately your member of staff starts work. Automatic enrolment duties apply to all employers. If you start a new PAYE scheme between April 2012 and 30 September 2017 your staging date will be between 1 May 2017 and 1 February 2018. If you become an employer now and don’t use a PAYE scheme to pay your staff, then you will not have a staging date. If your staff earn below £113 per week or £490 per month, HMRC may not require you to set up a PAYE scheme but you still have certain automatic enrolment duties and must start them as soon as you employ your first member of staff.

You must write to you staff to tell them how automatic enrolment applies to them. If they then choose to be put into a pension scheme, you must set this up for them but you do not have to pay into it. When you start to pay your staff over £113 per week, then you must set up a PAYE scheme with HMRC. The Pensions Regulator will then write to you and ask you to complete a declaration of compliance by a specific date. In some cases, directors may be exempt, if they do not have a contract of employment.